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How to Choose the Right Incubator for Your Startup (notes)

Following on from How to Select Your Angels, Orrick were back with another great startup panel, held on June 21st. This time, the topic of discussion was How to Choose the Right Incubator for Your Startup, featuring:

It was a diverse mix of panelists, with plenty of variation in how they run their organisations. In fact, the only thing they agreed on was that there’s no such thing as a ‘standard’ incubator or accelerator. Even commonly compared programs, like YC and 500 Startups, have significant differences in what they offer. Others, like the Founder Institute are even further differentiated in the services they provide. So when you’re looking for a program to help your startup, be sure to do your research, and pick the one that best fits your needs.

Here’s a rough overview of some the ways in which they differ:

  • Office Space
  • Investment
  • Entry Fees
  • Equity Pool (all participating companies share a piece of their company)
  • Shared Services (Legal, Accounting, Design, etc)
  • Company vs Entrepreneur Focus
  • Entry via Application vs Referral
  • Stage: Early vs Traction
  • Niche (Stanford, Women, Consumer, etc)
  • Official Mentor Matching
  • Event Participation

The main common element between all the featured programs was an element of community. You are typically expected to give something back in exchange for the advice and support you receive. But even this varies in the way it is administered. They also agreed that team / entrepreneur is far more important than the idea, so keep in mind that you need to pitch yourself, not just your vision.

Here’s a look at what each had to say about their own program (some commandeered the mic more than others, so the level of detail varies).

Founders Den
(Jonathan Abrams)

  • Neither an incubator or accelerator
  • Coworking space
  • Getting In
    • Referral only
    • Genuine referrals, so don’t bug the members!
  • Criteria
    • No discrimination on demographics
    • Avoid assholes
    • It’s about the community
    • Referrals is a big filter
    • Look at human factors rather than success likelihood
    • Good person good network
    • Serious about their idea and want to step up
    • Or experienced entrepreneur who wants to experiment
    • Expectation that a lot is going to happen in the 6 month lease

500 Startups
(Dave McClure)

  • Getting In
    • Don’t bumrush me
    • Don’t email me
    • Referrals through existing members and advisors
  • Space + Funding
    • Found that members were more helpful to each other than the mentors / investors were
  • Shared design and usability focus
  • ‘Still figuring it out’
  • Goals
    • Give enough money to explore
    • More funding for scale if it’s validated
    • Aiming for 50 percent to raise $250k
    • Focus on helping people to get to next level of funding
  • Criteria
    • Don’t look like Dave (as a failed entrepreneur)
    • Evidence of product success and unbiased customer usage
    • Product may shift, but clear customer focus
    • Ideally clear revenue model
    • Rare to fund people out of college
    • 5 to 10 years of experience in industry
    • Invest in unusual entrepreneurs
    • No prejudice

Founder Institute
(Adeo Ressi)

  • Aiming to master the science of success
  • Getting In
    • Why do you want to be an entrepreneur?
    • What are you passionate about?
    • Send you a test
    • Very scientific
    • Don’t even need an idea yet
  • Older candidates fare better due to experience
  • Perfect candidate
    • 31 – 34
    • Either gender
    • Frustrated by a burning idea
    • Not sure of next step
    • Need structure and guidance
    • Have vocational skills and achieved professional success in the past
    • Openness within reason
    • Fluid intelligence
    • Moderate level of agreeableness
  • No shared services, but enable them to get what they need
  • Very structured
  • Help from founder mentors
  • Work closely to build the business in small teams

(Kindra Tatarsky)

  • Accelerator not incubator
  • Focused on woman but not exclusive
  • Need at least one woman in the executive team
  • Looking for people that appreciate the relationships and give back

(Cameron Teitelman)

  • Getting In
    • Need someone from Stanford
    • Avoid the ‘new douchebags of silicon valley’
    • Passionate dedicated and true entrepreneur
  • Support
    • Just give you enough to live
    • Learn the hard way
  • Customized to each
    • Help fill the gaps in founder knowledge
    • Real time info at the point they need it
  • Ideal Candidate
    • Extremely focused
    • Know what they want and how
    • Must be open to feedback
    • Be able to recruit a team and draw people towards you
    • Ability to execute themselves

Finally, here are some general notes from the discussion:

  • There’s no standard ‘incubator’ or ‘accelerator’
  • No two are the same
  • Anyone who thinks it’s about investment or space doesn’t get it
  • Mixed feelings on shared services
  • Accounting and legal commoditized
  • Many are happy to let members work out of co-working spaces rather than compete and set up their own
  • Investment is typically at a low valuation so be aware
  • Success Measures
    • Able to raise further investment (Dave, not Adeo)
    • Exits (All)
    • Build large companies (All)
  • Many provide opportunities to connect rather than funding
  • Adeo thinks only Idealab has succeeded so far
  • Others feel Y-Combinator has proven themselves
    • Big company exits
    • Smaller exits and people are going back which is proof that it creates value in their mind
  • Some are focused on founders others on the company
  • Every entrepreneur is able to get investment
    • It’s a process
    • Not necessarily easy but you can do it
    • Need to incorporate feedback you get along the way
  • Lots of experimentation is happening with funding and services, which is a good thing
    • Not in competition with investors, but rather with business schools
  • Want people where success is aligned with adding back to community
  • Finding a good mentor is as hard as finding a good company
  • The incubators do a good job of filtering mentors
  • All about chemistry
  • Find and identify mentors beforehand
  • Have to be passionate and willing to pivot
  • Reasons for failure
    • Fear of failure and self sabotage when they get close to succeeding
    • Over engineering and not listening to customer feedback
    • Build something people want!
    • Wrong people end up in charge
  • Learn most from people who have failed
  • Don’t look at startup success for an example
  • All look at and value the person over the idea

If you made it this far, well done! It makes me wonder…..are there any services out there websites out there that give a transparent overview of the various incubators, accelerators and related programs? If not, perhaps we should create one. I’m not thinking anything overly complex. Just a simple table, that covers all the services out there, allowing you to filter by requirements or geography. If you’ve previously done research which you can contribute, or are just keen to help out, hit me up at pwattsmail [at] gmail [dot] com.

If you enjoyed this, you may also be interested in my notes on How to Select Your Angels.

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